African Central Banks must not accept “fit-for-all- purposes” prescriptions handed down from abroad as it addresses the continent’s current economic challenges, President Muhammadu Buhari has said.
The president rather urged African apex banks to continue to look for “innovative home-grown solutions” to fix the continent’s troubled economy.
Buhari spoke at the opening of the 2016 annual meeting of the association of African Central Banks which opened in Abuja yesterday.
The theme of the symposium was “Unwinding Unconventional Monetary Policies: Implications for Monetary Policy and Financial Stability in Africa.”
The major challenges, he noted, were slowdown in growth; weakening global demand; rising inflation; restrictions in capital flows; rising debt levels; increased exchange rate volatility and depleting external reserves.
He called for proactive and effective combination of conventional and innovative monetary policies. “The world is a dynamic place and with innovation, we can survive,” he stated.
President Buhari said such countries as Nigeria, Angola, South Africa and Mozambique that relied on natural resources only had been hit the hardest.
According to the president, China, a major trade and business partner to a number of African countries, was currently slowing down as it remodels its economy; sparking fears of further weakening.
He said the Central Bank of Nigeria had, for many years, spearheaded economic stimulus measures through specific intervention programmes, urging that the measures be sustained “through good times and through difficult times.”
Buhari emphasised that monetary policy alone was not sufficient to bring about desired economic growth, suggesting that “We must carefully balance monetary and fiscal policy measures.”
He said his administration was diversifying the economy away from excessive reliance on oil to ensure self-sufficiency and massive employment for millions of the youth.
“We shall also embark on export and production diversification steps including investment in infrastructure; promotion of manufacturing through agro-based industries and expansion of Regional Trade. All these would involve integrating the informal economy into the mainstream and providing funds to Small and Medium Enterprises,” he said.
He said his government would continue, with greater determination and focus, to pursue its goal of ensuring improved security for the country and its citizens without letting up on its fight against corruption and terrorism.
“Side by side, with economic stimulus measures, we must intensify our surveillance and give guidance to the operations of our financial institutions to reverse the trend of illicit flows of funds out of Africa.
“We should all be serious in putting place measures aimed at ensuring that the proceeds of these illicit flows are repatriated to their countries of origin with minimal bureaucratic hitches,” he suggested.
In his speech, the CBN Governor, Godwin Emefiele told the participants that the overwhelming consensus among experts that unwinding unconventional monetary policy could present challenges including that of financial instability, it has become necessary for central banks to evolve appropriate coping strategies as a safeguard against any negative impact on financial stability.
“Moreover, for the central banks in developing countries, it behoves that to unwind unconventional monetary policy, cognizance of the peculiarities and fragilities of our economic environment must be captured in designing the coping strategies.”
In 2008 when the global economic crises started, the Unconventional Monetary Policies (UMP) were adopted by different central banks around the world to help stimulate growth. The US started the UMP by adopting quantitative easing, followed by Bank of England and European Central Bank.
“We in Nigeria also adopted the UMP in our own little way, through stimulation of agriculture and manufacturing sectors. Some of these interventions we adopted to support the sectors were entirely our own version of UMP which is meant to stabilise the economy.”
“But we found out from around last year, we started seeing the incidences of unwinding of these UMPs to the extent that during the last quarter of the 2015, over $40 billion in foreign exchange moved out from the emerging market and it had impact on, not just Africa, but also in Nigeria and that is why we are seeing most African countries facing exchange rate and inflationary pressures, so now we are saying what should we be doing at this time to unwinding the unconventional policies, like in Nigeria, we are saying we are no longer going to rely on oil to diversify and the government will continue to support the system through stimulating the primary agriculture and SMEs and manufacturing that aim for export, those are measures we are adopting to support the economy.
The IMF managing Director, Christine Lagarde urged the African Central banks to exercise caution in the process of unwinding the UMPs. Represented by Michael Atingi-Ego, Lagarde said the global economy is facing instability and taking such decision requires serious caution to avoid negative outcomes.
Largarde was known for supporting the unconventional monetary policies adopted by various central banks in America, Europe and Japan.
She recently endorsed such UMPs for Europe and Japan but policymakers from emerging markets warned that such policies were increasing risks for the global economy.
Nigeria to offer exporters tax reliefs
The Minister of Finance, Mrs. Kemi Adeosun speaking at another event offered to grant tax relief to genuine exporters in the country.
The Minister, who spoke during the visit of the leadership of the Nigerian Economic Summit Group, (NESG) to her office in Abuja challenged the private sector to come up with policies which are implementable in view of the current economic situation in the country.
The Minister said the Ministry of Finance was ready to work with them and therefore challenged the group to keep track of some of the recommendations to the Federal Government.
“I want to challenge you by asking you to keep track of how many of your policies were implemented and those not implemented. You also need to find out why those policies were not implemented. They may be great policies at wrong times, or they may be wrong policies. They may even be un-implementable policies.